'SWOT Analysis Tencent Limited Holding\r'

'IntroductionIn March 2010 McKinsey published an term circleing with the obsession of the network of the Chinese state by reason the fol haplessing statement „ hoi polloi in the coun analyse’s 60 largest cities snuff it 70 percent of their leisure time online. unstable changes in the consumer food food market argon alikely as a result.â€Å"1 China’s bring ins population outgrowthd at the check of 2012 to a total flesh of 564 billion drillrs comp atomic number 18d to just approximately 250 million ingestionrs in 2008, according to the China lucre profits Information C estimate (CNNIN).2 The main reasons for this enormous harvest is strongly connected with different aspects, as for show slickness the general growth of Gross-Domestic-Product (GDP), lower priced computers, much affordable telecom connection fees, regime tide over to profits usage, and low-cost entertainment aspects. This affected, that in any case lower income groups st arted to single-valued function the internet.3 Answering to this prof go for sufferment and growth of Chinas mesh population, the lucre service industry is nearly to improver up to 17 percentages in 2013. In the culture old age, the cyberspace service industry achieved flat iodine-year development rates up to 20 percentages, resulting of the booming demand.The net market seems to be quite cheery for the moment but even in the following days researches forecast an one-year growth of approximately 10 percentages. This is due to the expansion of existing extends in the bea of e-commerce and ad work.4 Observing the numbers, 148 million wad suffer already experienced Internet shop since 2010 and it is expected that 30 million people testament addition exclusivelyy take away use of it by the end of 2015.5 The Economist stated, â€Å"the future of e-commerce is China”.6 anyways the e-commerce and advertisement services as well the application services b ecame more than and more important over the last years because of the introduction of smartphones and tablets.7Recognizing the trends, Tencent Holdings check decided 20 years ago to enter the market and fin onlyy became the largest Internet Service Portal in China. Tencent even so enjoys a quasi monopoly position, which is hardly endangered due to move arguing. That is the reason why they need to think about victimization rising opportunities and copeing upcoming threats. Consequently Tencent should brook out a Strengths-, Weaknesses-, Opportunities-, Threats-Analysis (SWOT-Analysis), which includes the study of their declare weaknesses and chromas in the informal dimension and the resulting opportunities and threats large-minded from remote influences.This subject impart starting timely give an overview about the internal strengths and weaknesses. Furthermore Tencent’s impertinent surroundings exit be analyzed and the results leave behind be apply for defining the opportunities and threats of the conjunction Before starting with the tangible SWOT-Analysis for Tencent the first Chapter gives a short explanation about SWOT-Analysis in general.2 Definition SWOT- Analysis As mentioned in the introduction, there are two different separate of changes in the milieu, which lead to affect the performance of companies. This chapter will explain the difference between internal and external milieu and their interaction. Furthermore the beside part will explain the so-called SWOT-Analysis in detail.Internal milieu synopsis points out strengths and weaknesses of a corporation that in turn, supports decision-making fulfilles concerning the discourse of upcoming threats and opportunities.8 Knowing which strengths and weaknesses the gild has to face, the internal surround analysis studies aspects like assets, people or fellowship on the one hand and financial deadlines or gaps in capabilities on the separate hand.9 Analyzing the in ternal surroundings is very important because it defines the capability of the company to deal with the threats and opportunities given by the external milieu.10 remote surroundings deals with all developments on the marketplace, including political, economical, social, legal and technical conditions as well as customers, competitors, suppliers and the public. Changes in the external environment or the so-called STEEP (socialcultural, scientific, ecological, economical, political/legal)  overstretch the companies in most cases to rethink their actual strategy, to harbor use of the emerged opportunities and to observe occurring threats.11 As for instance utilize the development of a peeled market as opportunity or dealing with threats as new competitors or diminish demand.12 To use opportunities means to develop a best-practice strategy. Regarding this, companies fix to decide, whether it is the best opportunity to turn something in short supply, to provide something i n a better way what already exists, or to bring about a totally new return.13 Concerning to that, the company has to grapple if there exists demand, needs and wants for the intersection they want to provide.14 face up threats and not severe to fend them often leads to decreasing profits or lower sales. On the one hand knowing these threats gives the opportunity to react and trying to block, that threats are going to influence the company’s performance.15 On the other hand firms often do not have control over the threats, which affects the company negatively like for instance new competitors are entering the marketplace. This results in giving up electromotive force customers and thus decreasing demand.16Bringing the internal and external environment analysis together is what you call a SWOT-Analysis. The SWOT-Analysis evaluates all strengths, weaknesses, opportunities and threats of a company, which builds the base for a strategy formulation.17 substance that knowing the strengths and reduce weaknesses help companies to use opportunities on the one side, On the other side to use strengths and develop strategies to avoid that weaknesses will perish the organise of threats. After this short definition of the SWOT-Analysis the next measurement will be to work out the strengths, weaknesses, opportunities and threats of the Tencent Holdings modified. 3 SWOT-Analysis of Tencent Holdings Limited3.2 Internal Environment AnalysisAs mentioned in the Introduction the Internet Industry in China is booming. To cover all possible marketplaces in the Internet Tencent offers a handsome range of products and services. Besides the most popular service, the instantaneous Messenger called QQ including numerous added services, Tencent provides online media, (wireless) internet value added services, synergistic entertainment services, oddly in the online-gaming sector, e-commerce platforms and services as well as online advertisement services.18 Tencent al so follows current trends, as for instance launching a nimble application of a message service and added games and a mobile payment system, because of the latest development of utilise smartphones and tablets instead of personal computers.19 Tencent is one of the oldest Internet corporations in China and with its QQ platform the company goed 798,2 million exploiter accounts by the end of 2012.20 As a result, Tencent influenced the communion instauration in China fundamentally. Another strengths lies unimpeachably in the broad product and service offer of Tencent and the way in which they create synergies. The company offers septette main business lines, starting from instant electronic messaging to online advertisement services. Besides just offering bighearted services, Tencent tries to bind their users to the company’s value-added and paid services, in auberge to make profit.21 The strategy aims to offer the Internet population the possibility to use a abunda nt variety of services in one company.Furthermore Tencent could hit a fate of experiences and knowledge over the quondam(prenominal) 20 years as one of the first providers in the Internet service sector, which signifi substructuretly fortify the company’s research and development abilities. patronage having already the mature technology in the market, fractional of the employees of Tencent belong to the Research and Development department, to ensure Tencent’s current market leading position and receive this competitive advantage. to boot to that the Tencent Research institute, which is China’s first Internet institute with the main goals in research and development of core technology on the Internet, supports the corporation in universe innovative.22 Another strength of Tencent is their workforce as Tencent sees them as the â€Å"most extraordinary asset and emphasized on the training of employees” by using different Training Systems.23 Moreover Tencent Holdings Limited is the trio largest Internet operator in the orb and the largest listed company in China.24 Benefitting from more advantages due to the companiescompany’s size there are also weaknesses the company has to face. In the following part the internal environment focuses on revealing the weaknesses of Tencent.Regarding the large variety of the product range Tencent,Tencent faces the fear of cannibalization because it creates a competitive occurrence in between their products. An example can be giving by the different instant messaging services WeChat and QQ or TM and RTX, which serve the aforementioned(prenominal) purpose. Besides that QQ mobile messenger gets more and more the look of WeChat, which makes it even more competitive and leads to high confusion for the consumers.25 Moreover Tencent greatest weakness is existence not really innovative rather than being a â€Å"transcript cat”. This occurs with the fact, that Tencent copied a lot from successful western companies. QQ for example is a copy of the Israeli invention ICQ and SOSO, the search engine of Tencent uses especially Google as a model.To conclude the internal environment analysis, one can summarize, that Tencent is a extremely true company with a lot of market precedent due to their long existence. On the opposite Tencent can notcannot convince with real innovative power. To get an idea what influences TencentsTencent’s decision externally the next tint will be to analyze the current market situation of the Internet market in China.3.1 External Environment AnalysisTencent operates in a highly ambitious and rapidly changing environment. To get an idea what external impacts Tencent has to face it is important to know, what external factors the Chinese Internet market is about. As already mentioned China, faces a fast growing market in e-commerce because of the increasing number of Internet shoppers. The government noticed the importance of thi s growing market as well and plans to â€Å"upgrade the technological capabilities of e-commerce”.27 Another importance opportunity lies in using the political support, which is communicated in the 12th five-year plan and includes the support for the â€Å"new-generation IT” and additionally the advance of the information networks, mobile confabulation and the Internet.28 China is nowadays the largest Internet market in the world, which implicates that it is also one of the most competitive markets in the world.In addition to the high development of the Internet painting many companies entered the market in the last years, which leads to a highly competitive situation in general. Chinas Internet population is yet growing but the annual growing ratio halved already from 20 percentages in the last years to 10 percentages as forecasted. Besides that, more and more startups enter the markets, which results sooner or later in a fully well-to-do market and a loss in profit and market constituent.As an example for the highly competitive market, the digit below shows the current competition situation on the search engine market in China.There are already eight providers only for search engines on the market including world(prenominal) companies like Yahoo and Google. The low market share of these global companies underlines the fact, that there are still restrictions from the government concerning the fully market access of these companies.Image : China Search Engine Market donation in August 201330Even if governmental regulations already have relaxed a bit, Chinese Internet sector faces still a lot of restrictions. Chinas Internet companies benefit by this, because many foreign websites are still block up and they are not exposed to powerful competitors like Facebook. This in consequence creates the possibility to develop and intone own applications. On the other hand it could become a threat as soon as the government decides to abolish this restrictions. Chinese Internet companies accordingly have to face the full transnational competition against global players as for example Google.31 After giving this overview about the external and internal environment the next chapter will use this information by concluding recommendations about Tencent’s future strategy.3.3 SWOT-Analysis and RecommendationsTencent entered the Internet market in many different dimensions and accordingly places their product and service offering. Due to the earlier analysis, there are especially three main product categories where Tencent should use their opportunities in further expansion. Firstly, Tencent should, due to the growth-intensive market segment, plump their e-commerce offer by ontogenesis for instance their website Papai.com. To even attract more possible Internet shoppers, they also should expand their online advertisement services. Thus, they can make use of synergies they already created through their broad offers, b y linking their advertisements services with the shopping sites they own. This second measure, leads to the creation of new emf profit zones.Thirdly, Tencent should not only focus on expanding existing offers but also develop new products, as for instance in the sector of hide computing. By doing so, they can fully exhausting governmental support. Taking into consideration, that the market will be overt up in the long-term, Tencent should emphasis their innovation process on new products and services for the national and also world-wide market. This should not be very intemperate to accomplish, since Tencent disposes of a highly experienced workforce in Research and Development. This in consequence will modify the company to expand international and compete with other global players. If Tencent wants to keep their position as the third largest Internet company in the world they have to continue growing their business. Considering the slower growing Internet population in Chi na, Tencent needs to go international to keep their growing position.Tencent did this by investing in foreign companies as for instance in the case of FAB.3233 This expansion should be continued in order to gain international market share and increase their portfolio in other Internet based services, as well as to improve their overall operative capability. Another possibility to do so is by expanding through strategical alliances… By building strategic business partnerships within China and gaining market share in several(prenominal) sectors Tencent is also able to fend the threat of market portal by international Internet companies in turn. Tencent furthermore has got a highly influence on the communication world in China as one of the oldest Internet company and built already a lot of barriers for international companies.Taking the messenger service QQ as an example for the broadly speaking used messenger in China it enjoys a very high customer liability. Consequently T encent could prevent loosing their position in China because although of the feared abolishment of several governmental restrictions concerning the entry of international companies. Additionally Tencent should try to avoid that QQ gets more and more the look of WeChat. As already explained, this could tempt users to change to competitors because of confusion. In this case, Tencent should regard cannibalization by offering differentiated products of the same purpose, to avoid losing costumers to competitors. The image below shows a summery of the named points and what the SWOT-Analysis and recommendations for the Tencent Holdings Limited contain.Image 2: SWOTs of Tencent Holdings Limited344 ConclusionInternet business in China is still one of the fastest growing industries in the world and Tencent used and uses this opportunity a lot in expanding existing products, launching new services and developing better solutions for the internet population in general. These actions are suppor ted by the try of going more and more international. Even though the external environment analysis showed that the Internet market is influenced by many factors, which co-determines the performance of Tencent an all the other Internet companies. To reach the best performance they could get, Tencent has to use its strengths and to improve its weaknesses to make the best out of every trend, meaning using opportunities and fending threats.To summarize what the work pointed out in the previous chapter, Tencent shouldTencent should expand their e-commerce and their online advertisement services. Moreover there is a big opportunity to create national and international strategic businesses trough the investments or the development of own innovations, which should be easily possible due to he strong research and development activity of Tencent. Additionally to that, Tencent already is the third largest Internet company worldwide, which makes it easier for them to enter international markets and gaining new customers all around the world.Regarding the governmental aspects, Tencent needs to use the supports given by the government and stress the development of new systems. Furthermore Tencent should definitely try to further build their market entry barriers. As a conclusion, the SWOT-Analysis of Tencent Holdings Limited showed, that the company is justifiedly positioned at the top in the world´s largest Internet market, due their numerous strengths. But in times of liberalization, globalization and an almost satisfied domesticated market, Tencent has to fight against the identified threats in the upcoming years.\r\n'